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RBI bans DHFL from taking deposits under Pirmal management

RBI bans DHFL from taking deposits under Pirmal management
Image Source : PTI

RBI bans DHFL from taking deposits under Pirmal management

The Reserve Bank has revoked the deposit-taking standing of Dewan Housing Finance (DHFL), the primary monetary companies agency to go for chapter proceedings, and has reclassified it as a non-deposit taking housing finance firm, earlier than approving the Piramal group’s bid to take over it in direction of the top of the decision course of.

The revelation comes within the June 7 NCLT Mumbai order that has accepted the Rs 35,250-crore bid for the as soon as second largest mortage lender by Piramal Capital & Housing Finance, forcing over 65 per cent haircut on the collectors and simply Re 1 to its NCD holders to whom it owes greater than Rs 45,000-crore.  

On the 14th web page of the 86-page NCLT order by HP Chaturvedi and Ravikumar Duraisamy, it says DHFL not is a deposit-taking NBFC however a non-deposit taking one.

The adjustments had been made in February 2021, after the RBI gave a non-objection to the January 25, 2021 software by R Subramaniakumar, the DHFL administrator, citing Rule 5 of its FSP (monetary companies suppliers) Rules.

“Pursuant to the FSP Rules, the RBI communicated its ‘no objection’ on February 16, 2021 for change in control/ownership/management in DHFL in terms of Rule 5(d)(iii) of the FSP Rules and also in terms of para 3 of NHB circular – housing finance companies — approval of acquisition or transfer of control Directions, 2016, subject to (inter alia) the condition that the deposit-taking status of DHFL will be revoked and merged entity of DHFL and Piramal Capital shall function as a non-deposit taking housing finance company,” says the NCLT order.

In the concluding a part of the order, the bench reiterates that the decision is topic to the truth that RBI’s non-objection, which relies on the situation that “the standing of the company debtor (DHFL) is modified from a deposit-taking housing finance firm to a non-deposit-taking housing finance firm”.

It will be famous that DHFL turned the primary monetary companies entity to be referred to the NCLT for chapter, when the RBI on November 20, 2019 outmoded the DHFL board and appointed Subramaniakumar as its administrator.

The firm went down under after its promoters allegedly siphoned of public funds and defaulted on its debt repayments value over Rs 95,000 crore to 21 banks and tens of hundreds of depositors.

More than 55,000 retail and institutional traders maintain Rs 5,375 crore value of fastened deposits in DHFL.

The Rs 3,5250-crore bid by the Piramal group was accepted by the committee of collectors on January 15, 2021.

The authorities needed to amend the RBI Act and notify a bit of the chapter code to allow the RBI to ship DHFL to the NCLT under Section 45-IE(2) of the RBI Act which offers with governance issues and defaults.

Two days superseding its board the RBI on November 22, under Section 45-IE 5(a) of the RBI Act, constituted a three-member advisory committee under Rajiv Lall, non-executive chairman of erstwhile IDFC First Bank, NS Kannan, managing director of ICICI Prudential Life, and NS Venkatesh, chief government of the Mutual fund foyer Amfi to advise the administrator within the operations of DHFL through the decision course of.

The  NCLT admitted the case December 3, 2019, and cleared the method on June 7, 2021, as the entire course of received delayed by the pandemic-driven lockdowns.

However, the DHFL case scored some uncommon headlines when the Mumbai NCLT bench headed HP Chaturvedi and Ravikumar Duraisamy on May 26, 2021, had requested the committee of collectors to relook on the prepared provide of over Rs 92,000 crore provide made by the Wadhawans, the unique promoters of DHFL.

The order was stayed by appellate physique NCLAT the very subsequent day and on June 7, the ultimate order approving the Piramal group bid, which is simply a 3rd of its dues, was issued. 

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